D-ONE

VALUATION METHODOLOGIES

D-one Valuation platform employees 8 international methodologies that are best suited for businesses that are starting up , growing, or at maturity. While some methodologies are more suited for start-ups others are more used for growing and mature business as such, we have applied a weighted average matrix the best represents the business stage.

The brief classification of methodologies is as below:

Qualitative Methods

Scorecard Valuation
Checklist Valuation
Stage Valuation

Investor Returns Method

Venture Capital Valuation

Relative Valuation Methods

Trading Comps
Deal Comps

Future Cash Flow Methods

DCF (Exit Multiple)
DCF (LT Growth)

Valuation Methodologies Weightage

Development stage	Scorecard	Checklist	Stage Valuation	Venture Capital	Trending Comps	Deal Comps	DCF(Exit Multiple)	DCF(LT Growth)
Idea	28%	28%	28%	16%	0%	0%	0%	0%
Development	22%	22%	22%	16%	5%	5%	5%	5%
Startup	13%	13%	13%	13%	13%	13%	13%	13%
Expansion	5%	5%	5%	13%	19%	19%	19%	19%

The default weights for these methods have been assigned as per the below rationale:

Qualitative information is more important in early stage companies, where performance uncertainty is extremely high, so qualitative methods are assigned a relatively higher weightage for companies in Idea and Development stage

The investors’ view is equally important across all stages, so the weight of the VC method does not change much through the development stages

Quantitative information is more reliable in later stages, when a company already has a proven financial track record. So quantitative methods are assigned a relatively higher weightage for companies in the Expansion stage

Qualitative Valuation Methods

The Average (required for Scorecard valuation) and Maximum (required for Checklist & Stage valuations)

This method compares the target company to typical angel-funded startup ventures and adjusts the median and maximum valuation of recently funded companies in the region to establish a pre-money valuation of the target. Such comparisons can only be made for companies at the same stage of development, in this case, for prerevenue (or minimal revenue) startup ventures

We sourced our data for startups using CrunchBase one of the biggest data hubs for startups around the world.

The elements considered in the Checklist method are:

1. Quality of the Management Team

2. Market size and opportunity

3. Product and technology

4. Strategic Relationships

5. Product Rollout or Sales

Venture Capital method

The Venture Capital method is an often used in valuations of pre revenue companies where it is easier to estimate a potential exit value once certain milestones are reached. Usually the exit is within 3 to 7 years

The return on investment can be estimated by determining what return an investor could expect from that investment with the specific level of risk attached.

We sourced our data for startups using Capital IQ one of the biggest data hubs for companies’ data in the world.

Market comparable and Transaction methods

The market comparable method attempts to estimate a valuation based on the market capitalization of comparable listed companies.

The comparable transaction method attempts to value an entire company by comparing a private company in a similar field, and using different key ratios.

These methods are based on using different key ratios and multiples like earning, sales, R&D investments, to estimate the value of a company. They are used for mature companies who are profitable.

We sourced our data for startups using Capital IQ one of the biggest data hubs for companies’ data in the world.

Discounted Future Cash Flows

Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its expected future cash flows. It is used on companies who have proven financial track record.

The return on investment can be estimated by determining what return an investor could expect from that investment with the specific level of risk for a mature growing/ mature company in the industry and country the company is operating in.

We sourced our data for startups using Capital IQ one of the biggest data hubs for companies’ data in the world.

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